RBI MPC revises marginal standing facility (MSF) rate to 5.65%

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday revised the marginal standing facility (MSF) and the bank rate to 5.65%. The standing deposit facility (SDF), which represents the lower band of the interest rate corridor, has been raised to 5.15% from 4.65% earlier. 

The Monetary Policy Committee voted unanimously to hike the benchmark interest rate by 50 basis points (bps) to 5.4% with immediate effect. It is now back to the pre pandemic levels and highest since 2019. The RBI Policy stance is retained at Withdrawal of Accommodation.

Also Read | RBI monetary policy committee meet: Key highlights

RBI Governor Shaktikanta Das announced that the FY23 GDP growth forecast has been retained at 7.2%. Real GDP growth projection for April-June seen at 16.2%, July-September GDP growth seen at 6.2%, October-December GDP growth seen at 4.1% and January-March 2023 GDP growth seen at 4.0%.

The Consumer price index (CPI) inflation remains uncomfortably high and is expected to remain above 6%, said RBI Governor. CPI forecast for FY23 kept unchanged at 6.7% on assumption of normal monsoon and crude oil at USD 105 per barrel. CPI inflation for April-June FY24 is projected at 5%.

Also Read | Sensex surges 250 points, Nifty 74 points as RBI MPC hikes repo rate by 50 bps

Governor said “Indian economy faces headwinds from global factors like geo-political risks. Domestic economic activity showing signs of broadening whereas rural demand shows mix trend”.

Edible oil prices likely to soften further, a development that may come as a relief for the common man.

Also Read | Explained: Impact of RBI’s repo rate hike on deposits, loans

Surplus liquidity in the banking system has come down to Rs 3.8 lakh crore, from Rs 6.7 lakh crore in April-May, said Das, adding that rise in term deposit rates should increase liquidity for financial sector.

Also Read | FDI inflows have improved to $13.6 billion in Q1FY23: RBI Governor

While announcing the monetary policy decision, RBI Governor Das said that credit info companies will have their own internal ombudsmen system and the central bank will set up a panel to examine MIBOR benchmark, alternatives.